Loretta P
Employee Tax Expert

Get your taxes done using TurboTax

Hello @uncfooz   

 

Business startup and organization costs are both generally considered capital expenditures; however the IRS does allow you to elect to deduct up to $5000 of business startup and $5000 of organizational costs paid or incurred after 10/22/2004.  The IRS requires you to reduce the $5000 deduction by the amount of your total startup or organizational costs that exceed $50,000.  Any remaining costs must be amortized.  

 

There are 3 categories of startup costs the IRS considers eligible for tax deductions: 

  • Creating a trade or business (including investigating the creation or purchase of an active trade/business)
  • Preparing the business to open
  • Organizational costs

I've listed some helpful links which go into further detail below.

 

Helpful links:

Publication 535 (2022), Business Expenses 

Your guide to small business start up costs and taxes for 2023 

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